Cooking up innovation: when it comes to helping employees create new products and services, HR's efforts are a key ingredient

HR Magazine, Nov, 2004 by Ann Pomeroy

For Whirlpool Corp., it started five years ago. The appliance industry had reached a stalemate, and consumers who went shopping for appliances found "a sea of white" products with little to differentiate them except price, says Dave Binkley, the company's senior vice president of global human resources. Even the Benton Harbor, Mich.-based company, the largest player in the industry, needed to build its brand. And the best way to do that, management concluded, was through product innovation.

So former Whirlpool CEO Dave Whitwam (who retired July 1) and the executive committee pulled 75 employees away from their jobs at sites around the world and directed them to "learn about innovation." This "innovation board," which included a mix of employees ranging from hourly workers to vice presidents, spent nine months working on innovation full time, says Nancy Snyder, corporate vice president of strategic competency creation. They were tasked with teaching the rest of the company what they had learned.

What the experiences at Whirlpool and other innovative companies teach HR professionals is that innovation thrives in an environment that--among other things--encourages reasonable risk-taking and provides specialized training, proper motivation and appropriate recognition. In short, it requires top-flight--and sometimes out-of-the-box--HR skills and management.

Encouraging Risk-Taking

"In the 1980s, the [watchword] was quality; today, it's innovation," says Harry Burritt, vice president, corporate planning and development, at Whirlpool. But the two are not mutually exclusive, he says. "Now we want superior quality and faster cost reduction, plus innovation--all at once."

To achieve all three, organizations must develop a healthy, businesswide approach to managing risk.

"Successful organizations operate on the edge of chaos and embrace risk, error and ambiguity as a way of life," says UCLA professor Iris Firstenberg, author of The Minding Organization (Wiley, 1999). Yet these organizations also seek greater quality and efficiency by "practicing strategies that reduce the need for doing, undoing and redoing" work.

In her book, Firstenberg defines a successful organization as one that "balances chaos and order with a high tolerance for errors as an opportunity to learn." In such a climate, Firstenberg says, "people are encouraged to spend more time looking for errors so that less problem-solving is needed later, cutting down cycle time to completion of a project."

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That's a philosophy Whirlpool has embraced. "A problem solved in the design phase is a problem that never makes it out there" into the marketplace, says Tania Aldous, Whirlpool brand studio design manager in the global consumer design department.

Michael Murphy--CEO of St. Louis-based Mercy Health Plans, a 400-employee regional unit of a network of health care providers organized by the Sisters of Mercy--puts it in even simpler terms. "I tell people to hurry up and make their mistakes and get them out of the way," he says.

But how does an organization--particularly one that has been operating in a highly bureaucratic, hierarchical fashion for many years--convince employees that times have changed? It's all very well for a CEO to tell employees to innovate and not to worry about failure. But will that be enough for employees to take this message seriously?

"It has to be a demonstrated thing," says Murphy. Employees need to be able to talk to someone who has gone through the experience of seeing an idea fail, he says. They need to see that the person is still there, hasn't been demoted and is moving on to other projects. "One of the biggest challenges we have [at Mercy Health]," says Murphy, "is [new] employees who come in from other organizations and may be afraid of putting themselves at serious risk if they fail."

Donna McDaniel, SPHR, Mercy Health's executive director of human resources, says companies need to "allow room to fail." Don't spend so much time trying to figure out who was driving the car that hit someone, she says. Instead, try to figure out why it happened. "Was there not a stop sign there? Is that why it happened? If so, let's put one there."

Because Mercy Health is small, the process for soliciting ideas is informal: Employees are encouraged to volunteer for cross-functional teams led by managers or directors, and some teams may have executive sponsors who serve as mentors. "The management team is embracing change," says McDaniel, "and employees see that their leaders support innovation."

Most people are risk-averse and uncomfortable with change, says Randy Steinhoff, HR director at Quest Diagnostics in Teterboro, N.J., a company that develops and licenses medical tests and produces electronic products. But companies need to encourage employees to become more comfortable with both risk and change--or pay a high price. "The world is changing and if you don't change with it, you may miss out on the future," he says.

Not every new idea will work out, says Steinhoff, but "even in failure there are lessons to be learned. There's value in the journey," because it helps eliminate what doesn't work. "Sometimes," he says, "the best decision may be the decision not to go forward with a product or a service."